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Exhibit 10.4
SERVICE CONTRACT
In Guatemala City, on the twelfth day of
February of 2002; We, on the ONE PART
mister LUIS GENARO MORALES PADILLA, forty
eight years of age, married, doctor
and surgeon, Guatemalan, herein domiciled,
identify myself with Personal
Identification Card Number A dash one and
register four hundred forty eight
thousand forty eight, Granted by the
Municipal Mayor of this city, I act in my
capacity of President of the Board of
Directors and legal representative of the
Guatemalan Pediatric Foundation ("
Fundacion Pediatrica Guatemalteca"); in
conformity with my appointment conferred in
a Notary Act. authorized in this
city on the 19th day of February 2001 by
Notary Public Raymundo Caz Tzub, and
inscribed in the civil registry of this
city, under Article No. one hundred
forty two, of Folio one hundred two Book
six of Auxiliaries of Juridical
Persons; is therefore authorized to
subscribe the present act; henceforth named
"Contractor"; and, on the OTHER PART mister
JAMES A. TANTILLO, foreigner, of
legal age, Puerto Rico, transient in this
city, I am identified with passport
issued by the Secretary of State of the
United States of America with number one
hundred eleven million thirty thousand one
hundred sixty seven, I act in
representation of ALLIANCE SYSTEMS, INC.,
company duly organized under the laws
of the Commonwealth of Puerto Rico, with
address at Condado Avenue number eight
hundred four San Juan, Puerto Rico USA
(henceforth called "AS", and, NET LOTTERY
SERVICES LTD., corporation duly organized
under the laws of the Republic of
Ireland, with its address at Fumbally
Court, Dublin, Ireland, and also under the
laws of the State of New Jersey USA, at its
address at eleven Meadow Lane,
Pennington, New Jersey zero eight five
three four (HENCEFORTH NAMED "NLS" OR THE
OPERATOR). The parties with the intention
of offering to the general public
lottery games
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through the Internet as a direct
communication system and/or by wireless
communication Systems and/or through
connections at fixed points of sale, this
Service Contract is established for the
Administration, Operation and
development of lottery games through the
internet. The Contractor is authorized
by Legislative Decree No. Thirteen dash
eighty six Law for the Creation of the
Children's Lottery and its By-Laws for the
development and operation of
different types of lottery games. In
acceptance of our respective circumstances,
we have agreed to celebrate the present
covenant in order to offer
administrative services and make available
to the public, by Internet or
wireless Systems, lottery games and at an
opportune moment to equip fixed points
of sale to offer the public games in this
manner, in conformity with the
following terms:
FIRST: DEFINITIONS. In this Agreement the
following terms will have the
following meanings: 1) Agreement means this
covenant or contract, and all of its
parts or amendments. 2) Games mean any
scheme, plan, game, operation or
arrangement whereby prizes in the form of
money, property or benefit is given to
persons that submit themselves to the rules
of the games accessed through the
Internet or wireless networks, where the
winners will be determined by incidence
of luck amongst the ticket holders
(tangible or cybernetic). The games may
include games of all types, among others,
instant win tickets of any kind, and
also traditional lotteries, raffles,
numbers, Lotto, Bingo, Keno or cards,
telephone bets, or through E-Mail or
others. 3) OPERATOR means the operator of
the system. AS and NLS. 4) Network of
Internet Lotteries means the network of
dozens of State Lotteries and Institutions
for charitable purposes that have
joined the Operator's system to create
opportunities of winning large prizes and
provide economies of operations and
promotions. 5) Income means the gross sale
collected by the
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Operator, of the sale of any product
related with this Agreement and its
Internet games less automatic discounts and
other credits issued due to voided
tickets, and discounts for bank charges. 6)
Fixed Network Expenses mean all the
costs related to the maintenance and
operation of the system including software
license costs, commissions to re-sellers or
operators at points of sale, legal
expenses or of consultants, advertising and
promotions, and the costs of
administration and maintenance; and others
specified mutually by the Contractor
and the Operator. 7) Net Profit means those
of Income less paid out Prizes, less
Fixed Network Expenses in accordance with
reasonable procedures of accounting,
the fifth point and the formula agreed upon
mutually between the Contractor and
the Operators. 8) Just Cause mean reasons
based on laws, rules, agreements and
covenants which a reasonable person can
understand and justify actions based on
the reasoning provided.
SECOND: APPOINTMENT OF THE OPERATOR. 1) The
Contractor agrees to grant to the
Operator the administration, operation and
handling of all aspects of the
administration of Internet Lottery games or
by wireless networks, in the
territory of the Republic of Guatemala. 2)
The term of this Contract is seven
years, renewable automatically for a second
seven-year term, which begins at the
official start of sales. The Contractor is
obliged to prohibit the licensing to
any other company, firm, seller or person
to direct, operate, or commercialize
any part or parts of the activities of
lottery games through the Internet or
wireless networks, in his territory.
Likewise the Operator may not offer
services to another person in the Republic
of Guatemala for similar projects.
The conditions for the extension or
renovation of this Contract will be
determined by mutual accord between the
parts at an opportune moment. 3) The
Operator: a) will be the
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exclusive operator and provider of the
activities that are a result of the
Lottery by Internet or wireless access,
including without limitation, equipment,
programming, support Systems, design and
marketing; back-up Systems, all on his
own account; b) responsible for the
contracting, payment and training of the
necessary personnel for the activities, as
well as the acquisition by his own
account and risk of Systems, goods and
means necessary for the development of
operations and including Internet Systems
and other wireless networks and will
provide working capital inherent to the
business; c) provide Systems for
validation, distribution, payment Systems
and accounting; d) registration of
patents, brands, propaganda symbols, and
required programming for the handling
of games, whose licenses will be active
until the end of the term of the
agreement; e) provide statements of
accounts and other necessary monthly reports
and a yearly statement audited by an
accredited firm of certified public
accountants. At any time the Contractor may
verify accounts related to sales.
THIRD: OBLIGATIONS OF THE OPERATOR. 1) From
the date of start-up of operations,
the Operator will be responsible for the
operation of all aspects of Internet or
wireless lottery games and determine: a)
the types, characteristics, game
structure and its programming including the
structure of games, which will
previously be approved by the Contractor.
The games may include any which do not
conflict with other contracts previously
approved by the Contractor; b) The
Operator will determine the form, style and
configuration of bet receipts
issued, tangible or cybernetic, and the
coupons and other documents to be used
in connection with Internet or wireless
lottery; and c) The Operator will
establish the procedure and rules in
relation to the method of claims and
payment of prizes which are the result of
Games played on the Internet, and will
insure that players
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understand and accept these rules before
participating in the games, whose
aspects must be previously approved by the
Contractor. 2) The operations of the
sale of products through the Internet will
commence within six months after the
signing of this Contract. 3) At that
opportune moment the Operator will provide
the Contractor the necessary requirements
to
